Don't Fall for the Fake Loan Fraud

We have been approached by a Sheik (claimed to be Sheikh A. R. Khalid Bin Mahfouz) and an investment banker out of London (who claimed his name is Harry Holt). But they change names faster than you change your underwear. Both were very excited to invest in the company. The Sheik wanted an equity investment, but we had to set-up a bank account in Asia somewhere first, which would have had a minimum account deposit. The “investment banker” needed his upfront money for the attorney to draft the agreement. I think he even had a real attorney who said she did need money before she would draft any agreement.

What to look for in a fake loan scam:

1. Minimal due diligence, eager to invest large sums of money
2. They use generic email address (Yahoo, Gmail, etc.) not tied to a company
3. They have little to no Internet footprints (linkedin, search, etc.)
4. They have minimal if any documents/brochures. The one from “Harry” was amusing. I copied sections of its text and found them word for word on various investment and VC websites. It was a plagiarized patchwork quilt of other websites.
5. The term sheet from “Harry” looked pretty good because it was word for word from  book on the Internet (Note: Search for this line, on Google: “Bullet repayment at the Redemption Price, plus any and all accrued but unpaid interest at the Maturity Date, subject to the mandatory prepayment provisions”)
6. You can ask for references (which they will ignore or maybe give fake ones) but don’t waste your time.

If you want to check deeper, look into the email headers. If you are using gmail you just click the drop down on the right and select show original to see the headers. http://www.projecthoneypot.org) or Interfraud (http://interfraud.org/ni_fake_loans.htm). If you are contacted for one of these fake loan/investment scams, copy the headers and send them to the email address posted at the interfraud site so they can have their email shut down.

Then you can copy their IP address and search for it. It will probably show up in Project Honeypot.

If you still aren’t sure because you want to believe that someone fell in love with you or your company and cannot wait to invest, inform them that: “My board of directors will not disburse any upfront money for any purpose, or set-up any bank account. Any fees MUST be paid out of proceeds from your investment and payment will occur no sooner than 30-days after the wire clears our account.” That should cause them to decide to pass on your opportunity because you are “unreasonable”.

It is truly despicable that these kind of heartless scum play on the hopes and dreams of entrepreneurs to extract their money. But I guess they wouldn’t play this game if there weren’t suckers out there falling for it regularly enough. Don’t be a sucker.